Fleet Staff, Inc. v. Ohio Dept. of Job & Family Servs. , 2018 Ohio 824 ( 2018 )

[Cite as Fleet Staff, Inc. v. Ohio Dept. of Job & Family Servs., 2018-Ohio-824.]
IN THE COURT OF APPEALS OF OHIO
TENTH APPELLATE DISTRICT
Fleet Staff, Inc., :
Appellant-Appellant, :
No. 17AP-718
v. : (C.P.C. No. 16CV-4168)
Ohio Department of Job and : (ACCELERATED CALENDAR)
Family Services,
:
Appellee-Appellee.
:
D E C I S I O N
Rendered on March 6, 2018
On brief: Fisher & Phillips LLP, Daniel P. O'Brien, and
Scott W. Gedeon, for appellant.
On brief: Michael DeWine, Attorney General, and
Laurence R. Snyder, for appellee.
APPEAL from the Franklin County Court of Common Pleas
LUPER SCHUSTER, J.
{¶ 1} Appellant, Fleet Staff, Inc. ("Fleet Staff"), appeals from a judgment of the
Franklin County Court of Common Pleas affirming a decision of the Ohio Unemployment
Compensation Review Commission ("commission") finding that Fleet Staff is a successor
in interest to Stanley Staffing, Inc. ("Stanley Staffing"). For the reasons that follow, we
affirm.
I. Factual and Procedural Background
{¶ 2} Fleet Staff is a staffing company that provides temporary employees to clients
in various states, including Ohio. Stanley Staffing was a separate Ohio staffing company
until Fleet Staff and Stanley Staffing entered into a purchase agreement in July 2014.
No. 17AP-718 2
Under the agreement, Fleet Staff purchased, among other assets, "all" of Stanley Staffing's
"customers," "worksite employees and internal staff," "client, employee, and marketing
databases," and "furniture & fixtures in acquired offices." (May 20, 2016 Record of
Proceedings at E2535-V36.)
{¶ 3} On May 6, 2015, appellee, the Ohio Department of Job and Family Services
("ODJFS"), notified Fleet Staff that it had determined Fleet Staff is a successor in interest
to Stanley Staffing, effective August 11, 2014. Fleet Staff requested reconsideration, and the
director of ODJFS affirmed the successor-in-interest determination in November 2015.
Fleet Staff appealed the director's decision to the commission, and the commission held a
hearing regarding the appeal in February 2016. In March 2016, the commission issued a
decision affirming the director's determination. Pursuant to R.C. 4141.26, Fleet Staff
appealed the commission's decision to the trial court, and the trial court affirmed the
decision in September 2017.
{¶ 4} Fleet Staff timely appeals from the trial court's decision.
II. Assignments of Error
{¶ 5} Fleet Staff assigns the following errors for our review:
[1.] The trial court erred in finding Fleet had acquired all of the
integral, operational assets of Stanley Staffing.
[2.] The trial court erred in finding a transfer due to alleged
common ownership, management, or control.
III. Standard of Review
{¶ 6} The common pleas court's standard of review for appeals from decisions of
the commission affecting the liability of an employer to pay unemployment compensation
contributions or the amount of such contributions is set forth in R.C. 4141.26(D)(2). This
statute states in pertinent part that a common pleas court may affirm a decision of the
commission "if it finds, upon consideration of the entire record, that the determination or
order is supported by reliable, probative, and substantial evidence and is in accordance with
law." Id. "Reliable" evidence is dependable; that is, it can be confidently trusted. In order
to be reliable, there must be a reasonable probability that the evidence is true. "Probative"
evidence is evidence that tends to prove the issue in question; it must be relevant in
determining the issue. "Substantial" evidence is evidence with some weight; it must have
No. 17AP-718 3
importance and value. Our Place, Inc. v. Liquor Control Comm., 63 Ohio St.3d 570, 571
(1992).
{¶ 7} This court's role in reviewing a decision of the commission appealed pursuant
to R.C. 4141.26 is narrower than that of the trial court. Miracle Home Health Care, LLC v.
Ohio Dept. of Job & Family Servs., 10th Dist. No. 12AP-318, 2012-Ohio-5669, ¶ 18. As to
issues of fact appealed pursuant to R.C. 4141.26, this court determines only whether the
common pleas court abused its discretion in finding that the commission's decision is
supported by reliable, probative, and substantial evidence. An abuse of discretion requires
more than an error in judgment. To find an abuse of discretion, we must conclude that the
trial court's decision was without a reasonable basis and clearly wrong. Id. However, this
court's review of questions of law is plenary. Kate Corp. v. Ohio State Unemp. Comp.
Review Comm., 10th Dist. No. 03AP-315, 2003-Ohio-5668, ¶ 7.
IV. Discussion
{¶ 8} Fleet Staff's first assignment of error alleges that the trial court erred in
finding that Fleet Staff had acquired all assets integral to the operation of Stanley Staffing's
business. This assignment of error lacks merit.
{¶ 9} Under Ohio law, employers must contribute to the unemployment
compensation fund, and ODJFS is charged with determining the rate at which employers
contribute to the fund and maintaining separate accounts for each employer. Kate Corp.
at ¶ 3; R.C. Chapter 4141. If an employer transfers "all of its trade or business" to another
employer or person, the acquiring employer or person is the "successor in interest" to the
transferring employer and assumes the "resources and liabilities" of the transferring
employer's account, and continues the payment of all contributions, or payments in lieu of
contributions, due under R.C. Chapter 4141. R.C. 4141.24(F).
{¶ 10} R.C. 4141.24(H) empowers the director of ODJFS to "establish procedures to
identify the transfer or acquisition of a trade or business" and to "adopt rules prescribing
procedures for effecting transfers of experience." These procedures are set forth in Ohio
Adm.Code 4141-17. Ohio Adm.Code 4141-17-04(A) provides that a transferee "shall become
a successor in interest by operation of law" where (1) there is "a transfer of all of the
transferor's trade or business" and, (2) at the time of the transfer, "the transferor is liable
under Chapter 4141. of the Revised Code." Pursuant to Ohio Adm.Code 4141-17-01(A),
No. 17AP-718 4
" '[t]rade or business' includes all real, personal and intangible property integral to the
operation of the trade or business, and may include the employer's workforce as
applicable." "The transferee, as successor in interest, shall assume all of the resources and
liabilities of the transferor's account," and the director "shall revise the contribution rates
of the transferee to reflect the result of the successorship." Ohio Adm.Code 4141-17-04(B).
{¶ 11} Fleet Staff argues that it did not acquire all integral operational assets of
Stanley Staffing because Stanley Staffing's labor and clients were not transferred in total.
Fleet Staff asserts that only approximately 30 percent of Stanley Staffing's workforce
continued its employment with Fleet Staff after the purchase, and less than one-half of
Stanley Staffing's clients were retained by Fleet Staff. According to Fleet Staff, these
circumstances demonstrate that it did not acquire all assets integral to the operation of
Stanley Staffing's business.
{¶ 12} Fleet Staff's assertion that it did not acquire all assets integral to the operation
of Stanley Staffing's business is belied by the purchase agreement between Fleet Staff and
Stanley Staffing. Under the express terms of that agreement, Fleet Staff acquired "all" of
Stanley Staffing's customers and employees as part of the business transfer. That Fleet Staff
did not retain all of Stanley Staffing's employees and clients after the acquisition did not
alter the fact that Stanley Staffing sold all of its assets integral to the operation of its
business to Fleet Staff. Therefore, the trial court did not abuse its discretion in finding that
the commission's decision is supported by reliable, probative, and substantial evidence.
{¶ 13} Accordingly, we overrule Fleet Staff's first assignment of error.
{¶ 14} In its second assignment of error, Fleet Staff asserts the trial court erred in
finding it is a successor in interest to Stanley Staffing due to alleged common ownership,
management, or control. However, our resolution of Fleet Staff's first assignment of error
renders moot the issue raised in its second assignment of error. While Fleet Staff's first
assignment of error challenges the commission's successor-in-interest determination
under R.C. 4141.24(F), its second assignment of error challenges the commission's
successor-in-interest determination under R.C. 4141.24(G), which addresses
circumstances involving common ownership, management, or control between transferor
and transferee employers. Subsections (F) and (G) of R.C. 4141.24 provide separate bases
to reach a successor entity finding. See Valentine Contrs., Inc. v. Dir., Ohio Dept. of Job &
No. 17AP-718 5
Family Servs., 10th Dist. No. 15AP-86, 2015-Ohio-5576, ¶ 20-22 (R.C. 4141.24(F) and (G)
require differing analyses in determining whether a party is a successor in interest).
Because we find the trial court did not err in affirming the commission's determination that
Fleet Staff is a successor in interest to Stanley Staffing under R.C. 4141.24(F), it is
unnecessary to address the issue of Fleet Staff's successor-in-interest status based on the
application of R.C. 4141.24(G). Thus, Fleet Staff's second assignment of error is moot.
V. Disposition
{¶ 15} Having overruled Fleet Staff's first assignment of error and found moot its
second assignment of error, we affirm the judgment of the Franklin County Court of
Common Pleas.
Judgment affirmed.
SADLER and DORRIAN, JJ., concur.